Say you have started a successful F&B business. Over the past years, you’ve grown it from 1 to 5 outlets. What is the next step for your business? A great strategic approach is to invest in a Central Kitchen. Why so?
Prime cost reduction
Depending on your outfit and menu, by reworking various kitchen processes, one is able to centralise part of the production to a central premise, possibly up to 50% of work and even beyond. This makes the quality of food easier to maintain while food costs and wastage can also be better controlled. Given land scarce Singapore, reducing kitchen processes in the outlets itself translates to leaner outfits since this means owners can opt for smaller outfits with lower rental and optimise their labour and workflow.
Additional sources of revenue
In F&B and as in other trades, businesses that maximise their resources usually achieve the best results and good profits. Given its enormous economy of scale, central kitchens are more than just a cost reduction facility. One way operators make full use of it is to undertake OEM production of food. This is where excess capacity is used to produce food for other entities, which can honestly range from cafes to hotels, and even other businesses. Central kitchens that undertake this approach not only reduce costs for the main business, but also generates additional revenue.
However, this is not to say that central kitchens are easily managed. Down the years we have encountered clients of all sizes, who understood all the above principles, yet, without the proper expertise and due diligence, end up purchasing a facility that didn’t match their business strategy at all. Instead of an asset, the facility added to their liabilities.
How did that happen? Well to start off, every F&B has their own success factors, particularly in terms of food, the recipes and how they are prepared. This means when scaling up into a central production facility, owners need a solid understanding of all their recipes and kitchen processes. This enables them to 1. rework the entire workflow into a central facility 2. determine change management plans that enable the business to carry on as usual throughout the transition.
Of course this is always easier said than done, and the exact reason customers turn to us for our expertise.
What about technology?
Technology advancements have well benefitted central kitchen outfits as well. Even with the enormous production capacity of central kitchens, ERP (Enterprise Resource Planning) systems are even able to boost it even further by giving great visibility over every part of the production pipeline, from inventory to costing to logistics. Yet, ERP systems are generally designed to serve a range of business functions for a wide scope of businesses and are not optimised for central kitchens setups. And when they are, you can expect them to be costly. This is because, as shared earlier, every F&B has its own kitchen production processes, and outfitting one requires a fair bit of customisation.
Fret not however, as in our present day and age there’s always a solution through better technology. Here at Chef At Work we always endeavour to be ahead of market trends to deliver the most value to our clients. Likewise, we have been investing into software-based central kitchen management technology, and we are excited to unveil to our clients in time.